Exhibit
10.16


 


EMPLOYMENT
AGREEMENT


 


This Employment Agreement
(the “Agreement”) is made effective as of February 9, 2017 (the “Effective Date”), by and between Bank
34 (the “Bank”) and Jill Gutierrez (“Executive”). Any reference to the “Company” shall mean
Bancorp 34, Inc., the stock holding company of the Bank.


 


WHEREAS, the
Bank wishes to assure itself of the continued services of Executive for the period provided in this Agreement; and


 


WHEREAS, in
order to induce Executive to remain in the employ of the Bank and to provide further incentive for Executive to achieve the financial
and performance objectives of the Bank, the parties desire to enter into this Agreement; and


 


WHEREAS, the
Bank desires to set forth the rights and responsibilities of Executive and the compensation payable to Executive, as modified from
time to time.


 


NOW, THEREFORE,
in consideration of the mutual covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties
hereby agree as follows:


 


		1.	POSITION AND RESPONSIBILITIES.



 


During the term of
this Agreement, Executive agrees to serve as Chief Executive Officer of the Bank (the “Executive Position”), and will
perform the duties and will have all powers associated with such position as set forth in any job description provided to Executive
by the Bank, and as may be set forth in the bylaws of the Bank. During the period provided in this Agreement, Executive also agrees
to serve, if elected, as an officer of any subsidiary or affiliate of the Bank and in such capacity carry out such duties and responsibilities
reasonably appropriate to that office.


 


		2.	TERM AND DUTIES.



 


(a)          The
term of this Agreement and the period of Executive’s employment hereunder shall begin as of the Effective Date and shall
continue through January 1, 2019. Commencing on January 1, 2018 (the “Renewal Date”) and continuing on each January
1st thereafter (each a “Renewal Date”), this Agreement shall renew for an additional year such that the remaining term
shall be twenty-four (24) months, provided, however, that in order for this Agreement to renew, the disinterested members of the
Board of Directors of the Bank (the “Board”) must take the following actions within the time frames set forth below
prior to each Renewal Date: (i) at least sixty (60) days prior to the Renewal Date, conduct a comprehensive performance evaluation
and review of Executive for purposes of determining whether to extend this Agreement; and (ii) affirmatively approve the renewal
or non-renewal of this Agreement, which such decision shall be included in the minutes of the Board’s meeting. If the decision
of such disinterested members of the Board is not to renew this Agreement, then the Board shall provide Executive with a written
notice of non-renewal (“Non-Renewal Notice”) at least thirty (30) days and not more than sixty (60) days prior to any
Renewal Date, such that this Agreement shall terminate at the end of twenty-four (24) months following such Renewal Date. The failure
of the disinterested members of the Board to take the actions set forth herein before any Renewal Date will result in the automatic
non-renewal of this Agreement, even if the Board fails to affirmatively issue the Non-Renewal Notice to Executive. If the Board
fails to inform Executive of its determination regarding the renewal or non-renewal of this Agreement, the Executive may request,
in writing, the results of the Board’s action (or non-action) and the Board shall, within thirty (30) days of the receipt
of such request, provide a written response to Executive. Reference herein to the term of this Agreement shall refer to both such
initial term and such extended terms.


 




     


     


    

 


(b)          Notwithstanding
the foregoing, in the event that the Bank or the Company has entered into an agreement to effect a transaction which would be considered
a Change in Control as defined under Section 5 hereof while the Executive is employed pursuant to this Agreement, then the term
of this Agreement shall automatically be extended for twenty-four (24) months following the date on which the Change in Control
occurs.


 


(c)          During
the period of her employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods, and reasonable
leaves of absence, Executive will devote all of her business time, attention, skill and efforts to the faithful performance of
her duties under this Agreement, including activities and duties related to the Executive Position. Notwithstanding the preceding
sentence, subject to the approval of the Board, Executive may serve as a member of the board of directors of business, community
and charitable organizations, provided that in each case such service shall not materially interfere with the performance of her
duties under this Agreement, adversely affect the reputation of the Bank or any other affiliates of the Bank, or present any conflict
of interest.


 


(d)          Nothing
in this Agreement shall mandate or prohibit a continuation of Executive’s employment following the expiration of the term
of this Agreement.


 


		3.	COMPENSATION, BENEFITS AND REIMBURSEMENT.



 


(a)          Base
Salary. In consideration of Executive’s performance of the responsibilities and duties set forth in this Agreement,
the Bank will provide Executive the compensation specified in this Agreement. The Bank will pay Executive a salary of $238,703.00
per year (“Base Salary”). Such Base Salary will be payable in accordance with the customary payroll practices of the
Bank. During the term of this Agreement, the Board may consider increasing, but not decreasing (other than a decrease which is
applicable to all senior officers of the Bank and in a percentage not in excess of the percentage decrease for other senior officers),
Executive’s Base Salary as the Board deems appropriate. Any change in Base Salary will become the “Base Salary”
for purposes of this Agreement.


 


(b)          Bonus.
Executive shall be entitled to participate in any bonus plan or arrangements of the Bank in which senior management is eligible
to participate. Nothing paid to Executive under any such plan or arrangement will be deemed to be in lieu of the other compensation
to which Executive is entitled under this Agreement.


 


(c)          Benefit
Plans. Executive will be entitled to participate in all employee benefit plans, arrangements and perquisites offered to
employees and officers of the Bank. Without limiting the generality of the foregoing provisions of this Section 3(c), Executive
also will be entitled to participate in any employee benefit plans including but not limited to retirement plans, pension plans,
profit-sharing plans, health-and-accident plans, or any other employee benefit plan or arrangement made available by the Bank in
the future to management employees, subject to and on a basis consistent with the terms, conditions and overall administration
of such plans and arrangements.


 




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(d)          Vacation.
Executive will be entitled to paid vacation time each year during the term of this Agreement measured on a calendar year basis,
in accordance with the Bank’s customary practices, as well as sick leave, holidays and other paid absences in accordance
with the Bank’s policies and procedures for officers. Any unused paid time off during an annual period will be treated in
accordance with the Bank’s personnel policies as in effect from time to time.


 


(e)          Expense
Reimbursements. The Bank will reimburse Executive for all reasonable travel, entertainment and other reasonable expenses
incurred by Executive during the course of performing her obligations under this Agreement, including, without limitation, fees
for memberships in such organizations as Executive and the Board mutually agree are necessary and appropriate in connection with
the performance of her duties under this Agreement, upon substantiation of such expenses in accordance with applicable policies
and procedures of the Bank. All reimbursements pursuant to this Section 3(e)
shall be paid promptly by the Bank and in any event no later than thirty (30) days following the date on which the expense was
incurred. 


 


(f)          To
the extent not specifically set forth in this Section 3, any compensation payable or provided under this Section 3 shall be paid
or provided no later than two and one-half (2.5) months after the calendar year in which such compensation is no longer subject
to a substantial risk of forfeiture within the meaning of Treasury Regulation Section 1.409A-1(d).


 


		4.	TERMINATION AND TERMINATION PAY.



 


Subject to Section
5 of this Agreement which governs the occurrence of a Change in Control, Executive’s employment under this Agreement may
be terminated in the following circumstances:


 


(a)          Death.
Executive’s employment under this Agreement will terminate upon her death during the term of this Agreement, in which event
Executive’s estate or beneficiary shall be paid Executive’s Base Salary at the rate in effect at the time of Executive’s
death for a period of one (1) year following Executive’s death (payable in accordance with the regular payroll practices
of the Bank). In addition, for one (1) year following Executive’s death, the Bank will continue to provide medical, dental
and vision coverage substantially comparable to the coverage, if any, maintained by the Bank for Executive and her family immediately
prior to Executive’s death. Such continued benefits will be fully paid for by the Bank.


 


(b)          Disability.
Termination of Executive’s employment based on “Disability” shall mean termination because of any permanent and
totally physical or mental impairment that restricts Executive from performing all the essential functions of normal employment.
In the event of Executive’s termination due to Disability, Executive will be entitled to disability benefits, if any, provided
under a long term disability plan sponsored by the Bank, if applicable. In addition, for one (1) year following Executive’s
Disability, the Bank will continue to provide medical, dental and vision coverage substantially comparable to the coverage, if
any, maintained by the Bank for Executive and her family immediately prior to Executive’s disability. Such continued benefits
will be fully paid for by the Bank.


 




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(c)          Termination
for Cause. The Board may immediately terminate her employment at any time for “Cause.” Executive shall have
no right to receive compensation or other benefits for any period after termination for Cause, except for already vested benefits.
Termination for “Cause” shall mean termination because of, in the good faith determination of the Board, Executive’s:


 


	 	(i)	personal dishonesty;
	 	 	 
	 	(ii)	incompetence;
	 	 	 
	 	(iii)	willful misconduct;
	 	 	 
	 	(iv)	breach of fiduciary duty involving personal profit;
	 	 	 
	 	(v)	intentional failure to perform stated duties;
	 	 	 
	 	(vi)	willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order: or
	 	 	 
	 	(vii)	material breach by Executive of any provision of this Agreement.


 


(d)          Voluntary
Termination by Executive. In addition to her other rights to terminate her employment under this Agreement, Executive may
voluntarily terminate employment during the term of this Agreement (other than “With Good Reason” as defined below)
upon at least thirty (30) days prior written notice to the Board. Upon Executive’s voluntary termination, Executive will
receive only her earned but unpaid compensation and vested rights and benefits as of the date of her termination.


 


(e)          Termination
Without Cause or With Good Reason.


 


		(i)	The Board may immediately terminate her employment at
any time for a reason other than Cause (a termination “Without Cause”), and Executive may, by written notice to the
Board, terminate this Agreement at any time within ninety (90) days following an event constituting “Good Reason,”
as defined below (a termination “With Good Reason”); provided, however, that the Bank shall have thirty (30) days
to cure the “Good Reason” condition, but the Bank may waive its right to cure. Any termination of Executive’s
employment, other than Termination for Cause shall have no effect on or prejudice the vested rights of Executive under the Bank’s
qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or bonus plans, group life, health (including
hospitalization, medical and major medical), dental, accident and long term disability insurance plans or other employee benefit
plans or programs, or compensation plans or programs in which Executive was a participant.



 




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		(ii)	In the event of termination as described under Section
4(e)(i) and subject to the requirements of Section 4(e)(v), the Bank shall pay Executive, or in the event of Executive’s
subsequent death, Executive’s beneficiary or estate, as the case may be, as severance pay, a cash lump sum payment equal
to the Base Salary (at the rate in effect as of her date of termination) that Executive would have earned had she remained employed
with the Bank from her date of termination until, and including, the last day of the remaining term of this Agreement. Such payment
shall be made to Executive within ten (10) days following Executive’s date of termination, or if later, following the seventh
(7th) day after Executive’s execution of the Release required under Section 4(e)(v) hereof.



 


		(iii)	“Good Reason” exists if, without Executive’s
express written consent, any of the following occurs:



 


		(A)	the failure of the Bank to appoint or re-elect Executive
to the Executive Position;



 


		(B)	a material reduction in Executive’s Base Salary
or benefits provided in this Agreement (other than a reduction or elimination of Executive’s benefits under one or more
benefit plans maintained by the Bank as part of a good faith, overall reduction or elimination of such plans or benefits applicable
to all participants in a manner that does not discriminate against Executive (except as such discrimination may be necessary to
comply with applicable law));



 


		(C)	a change in Executive’s Executive Position to be
one of lesser authority or a material reduction in Executive’s authority, duties or responsibilities from the position and
attributes associated with the Executive Position;



 


		(D)	a relocation of Executive’s principal place of
employment by more than twenty-five (25) miles from Executive’s principal place of employment as of the initial Effective
Date of this Agreement; or



 


		(E)	a material breach of this Agreement by the Bank.



 




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		(iv)	Notwithstanding the foregoing, Executive shall not be
entitled to any payments or benefits under this Section 4(e) unless and until Executive executes a release of her claims (“Release”),
satisfactory in form to the Bank and the Company, against the Bank, the Company and any affiliate, and their officers, directors,
successors and assigns, releasing said persons from any and all claims, rights, demands, causes of action, suits, arbitrations
or grievances relating to the employment relationship, including claims under the Age Discrimination in Employment Act (“ADEA”),
but not including claims for benefits under tax-qualified plans or other benefit plans in which Executive is vested, claims for
benefits required by applicable law or claims with respect to obligations set forth in this Agreement that survive the termination
of this Agreement. In order to comply with the requirements of Code Section 409A and the ADEA, the Release shall be provided to
Executive no later than the date of her Separation from Service and Executive shall have no fewer than twenty-one (21) days to
consider the Release, and following Executive’s execution of the Release, Executive shall have seven (7) days to revoke
said Release.



 


		5.	CHANGE IN CONTROL.



 


(a)          Change
in Control Defined. For purposes of this Agreement, the term “Change in Control” shall mean the occurrence
of any of the following events:


 


		(i)	Merger: The Company or the Bank merges into or
consolidates with another entity, or merges another bank or corporation into the Bank or the Company, and as a result, less than
a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by
persons who were stockholders of the Company or the Bank immediately before the merger or consolidation;



 


		(ii)	Acquisition of Significant Share Ownership: There
is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required
under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, if the schedule discloses that the filing person
or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s
voting securities; provided, however, this clause (ii) shall not apply to beneficial ownership of the Company’s or the Bank’s
voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more
of its outstanding voting securities;



 


		(iii)	Change in Board Composition: During any period
of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the beginning
of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board
of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first
nominated by the board for election by the stockholders or corporators) by a vote of at least two-thirds (2/3) of the directors
who were directors at the beginning of the two-year period or who is appointed to the Board as the result of a directive, supervisory
agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation
(“FDIC”) shall be deemed to have also been a director at the beginning of such period; or



 




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		(iv)	Sale of Assets: The Company or the Bank sells
to a third party all or substantially all of its assets.



 


(b)          Change
in Control Benefits. Upon the occurrence of Executive’s termination Without Cause or With Good Reason on or after
the effective time of a Change in Control, the Bank (or any successor) shall pay Executive, or in the event of Executive’s
subsequent death, Executive’s beneficiary or estate, as severance pay, an amount equal to two (2) times the sum of her (i)
highest rate of Base Salary, and (ii) the highest annual bonus paid to, or earned by, Executive during the current calendar year
of Executive’s date of termination or either of the two (2) calendar years immediately preceding Executive’s date of
termination. Such payment shall be made in a lump sum within ten (10) days following Executive’s date of termination. Notwithstanding
the foregoing, the payment provided in this Section 5(b) shall be payable to Executive in lieu of any payment that is payable under
Section 4(e).


 


(c)          Termination
within Six Months Prior to Change in Control. In the event of Executive’s termination of employment under Section
4(e) within six (6) months prior to a Change in Control, Executive shall be entitled to the difference, if any, between the benefit
received under Section 4(e) and the benefit available to Executive under this Section 5 upon the effective date of the Change in
Control. Such benefit shall be payable in a cash lump sum payment to the former Executive within ten (10) days following the effective
date of the Change in Control.


 


(d)          280G
Cutback. Notwithstanding anything in this Agreement to the contrary, in no event shall the aggregate payments or benefits
to be made or afforded to Executive under this Agreement, either as a stand-alone benefit or when aggregated with other payments
to, or for the benefit of, Executive (collectively referred to as the “Change in Control Benefits”) that are contingent
on a change in control (as defined under Code Section 280G), constitute an “excess parachute payment” under Code Section
280G or any successor thereto, and in order to avoid such a result, Executive’s benefits payable under this Agreement shall
be reduced by the minimum amount necessary so that the Change in Control Benefits that are payable to Executive are not subject
to penalties under Code Sections 280G and 4999.


 


		6.	COVENANTS OF EXECUTIVE.



 


(a)          Non-Solicitation/Non-Compete.
Executive hereby covenants and agrees that, for a period of one (1) year following her termination of employment with the Bank
(other than a termination of employment following a Change in Control), Executive shall not, without the written consent of the
Bank, either directly or indirectly:


 


		(i)	solicit, offer employment to, or take any other action
intended (or that a reasonable person acting in like circumstances would expect) to have the effect of causing any officer or
employee of the Bank, or any of its respective subsidiaries or affiliates, to terminate her employment and accept employment or
become affiliated with, or provide services for compensation in any capacity whatsoever to, any business whatsoever that competes
with the business of the Bank, or any of their direct or indirect subsidiaries or affiliates, that has headquarters or offices
within twenty-five (25) miles of any location(s) in which the Bank has business operations or has filed an application for regulatory
approval to establish an office (the “Restricted Territory”);



 




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		(ii)	become an officer, employee, consultant, director, independent
contractor, agent, joint venturer, partner or trustee of any savings bank, savings and loan association, savings and loan holding
company, commercial bank, credit union, bank or bank holding company, insurance company or agency, any mortgage or loan broker
or any other entity that competes with the business of the Bank or any of their direct or indirect subsidiaries or affiliates,
that: (i) has a headquarters within the Restricted Territory or (ii) has one or more offices, but is not headquartered, within
the Restricted Territory, but in the latter case, only if Executive would be employed, conduct business or have other responsibilities
or duties within the Restricted Territory; or



 


		(iii)	solicit, provide any information, advice or recommendation
or take any other action intended (or that a reasonable person acting in like circumstances would expect) to have the effect of
causing any customer of the Bank to terminate an existing business or commercial relationship with the Bank.



 


(b)          Non-disparagement.
Executive agrees that, during the term and thereafter, she will not, directly or indirectly, alone or in conjunction with any other
party, make statements to customers or suppliers of the Company and/or the Bank or to other members of the public that are in any
way disparaging or negative towards the Company or the Bank, or the products or services of either, or the Company’s or the
Bank’s representatives, directors, or employees. The Bank agrees that, during the term and thereafter, the Bank will not,
directly or indirectly, alone or in conjunction with any other party, make statements to customers or suppliers of the Company
and/or the Bank or to other members of the public that are in any way disparaging or negative towards the Executive.


 


(c)          Confidentiality.
Executive recognizes and acknowledges that the knowledge of the business activities, plans for business activities, and all other
proprietary information of the Bank, as it may exist from time to time, are valuable, special and unique assets of the business
of the Bank. Executive will not, during or after the term of her employment, disclose any knowledge of the past, present, planned
or considered business activities or any other similar proprietary information of the Bank to any person, firm, corporation, or
other entity for any reason or purpose whatsoever unless expressly authorized by the Board or required by law. Notwithstanding
the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are
not solely and exclusively derived from the business plans and activities of the Bank. Further, Executive may disclose information
regarding the business activities of the Bank to any bank regulator having regulatory jurisdiction over the activities of the Bank
pursuant to a formal regulatory request. In the event of a breach or threatened breach by Executive of the provisions of this Section,
the Bank will be entitled to an injunction restraining Executive from disclosing, in whole or in part, the knowledge of the past,
present, planned or considered business activities of the Bank or any other similar proprietary information, or from rendering
any services to any person, firm, corporation, or other entity to whom such knowledge, in whole or in part, has been disclosed
or is threatened to be disclosed. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available
to the Bank for such breach or threatened breach, including the recovery of damages from Executive.


 




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(d)          Information/Cooperation.
Executive shall, upon reasonable notice, furnish such information and assistance to the Bank as may be reasonably required by the
Bank, in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party; provided,
however, that Executive shall not be required to provide information or assistance with respect to any litigation between Executive
and the Bank or any other subsidiaries or affiliates.


 


(e)          Reliance.
Except as otherwise provided, all payments and benefits to Executive under this Agreement shall be subject to Executive’s
compliance with this Section 6, to the extent applicable. The parties hereto, recognizing that irreparable injury will result to
the Bank, its business and property in the event of Executive’s breach of this Section 6, agree that, in the event of any
such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction
to restrain the violation hereof by Executive and all persons acting for or with Executive. Executive represents and admits that
Executive’s experience and capabilities are such that Executive can obtain employment in a business engaged in other lines
of business than the Bank, and that the enforcement of a remedy by way of injunction will not prevent Executive from earning a
livelihood. Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to them for such
breach or threatened breach, including the recovery of damages from Executive.


 


		7.	SOURCE OF PAYMENTS.



 


All payments provided
in this Agreement shall be timely paid by check or direct deposit from the general funds of the Bank (or any successor of the Bank).


 


		8.	EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.



 


This Agreement contains
the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor
of the Bank and Executive, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring
to Executive under another plan, program or agreement (other than an employment agreement) between the Bank and the Executive.


 


		9.	NO ATTACHMENT; BINDING ON SUCCESSORS.



 


(a)          Except
as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation,
sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment
by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.


 




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(b)          The
Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all
or substantially all the business or assets of the Bank, expressly and unconditionally to assume and agree to perform the Bank’s
obligations under this Agreement, in the same manner and to the same extent that the Bank would be required to perform if no such
succession or assignment had taken place.


 


		10.	MODIFICATION AND WAIVER.



 


(a)          This
Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto.


 


(b)          No
term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement
of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel. No such written
waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other
than that specifically waived.


 


		11.	REQUIRED PROVISIONS.



 


Notwithstanding anything
herein contained to the contrary, the following provisions shall apply:


 


(a)          The
Board may terminate Executive’s employment at any time, but any termination by the Bank’s Board other than termination
for Cause shall not prejudice Executive’s right to compensation or other benefits under this Agreement. Executive shall have
no right to receive compensation or other benefits for any period after Executive’s termination for Cause.


 


(b)          If
Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs
by a notice served under Section 8(e)(3) [12 U.S.C. §1818(e)(3)] or 8(g)(1) [12 U.S.C. §1818(g)(1)] of the Federal
Deposit Insurance Act (the “FDI Act”), the Bank’s obligations under this Agreement shall be suspended as of the
date of service, unless stayed by appropriate proceedings. If the charges in the notice are dismissed, the Bank may in its discretion:
(i) pay Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in
whole or in part) any of its obligations which were suspended.


 


(c)          If
Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued
under Section 8(e)(4) [12 U.S.C. §1818(e)(4)] or 8(g)(1) [12 U.S.C. §1818(g)(1)] of the FDI Act, all obligations of the
Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall
not be affected.


 




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(d)          If
the Bank is in default as defined in Section 3(x)(1) [12 U.S.C. §1813(x)(1)] of the FDI Act, all obligations of the Bank under
this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting
parties.


 


(e)          All
obligations under this Agreement shall be terminated, except to the extent determined that continuation of this Agreement is necessary
for the continued operation of the Bank, (i) by the Comptroller of the Office of the Comptroller of the Currency or his or her
designee, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained
in Section 13(c) [12 U.S.C. §1823(c)] of the FDI Act; or (ii) by the Comptroller or his or her designee at the time the
Director or his or her designee approves a supervisory merger to resolve problems related to operation of the Bank or when the
Bank is determined by the Comptroller to be in an unsafe or unsound condition. Any rights of the parties that have already vested,
however, shall not be affected by such action.


 


(f)          Notwithstanding
anything else in this Agreement to the contrary (with the exception of Section 4(c)(i)), Executive’s employment shall not
be deemed to have been terminated unless and until Executive has a Separation from Service within the meaning of Code Section 409A.
For purposes of this Agreement, a “Separation from Service” shall have occurred if the Bank and Executive reasonably
anticipate that either no further services will be performed by Executive after the date of termination (whether as an employee
or as an independent contractor) or the level of further services performed is less than fifty (50) percent of the average level
of bona fide services in the thirty-six (36) months immediately preceding the termination. For all purposes hereunder, the definition
of Separation from Service shall be interpreted consistent with Treasury Regulation Section 1.409A-1(h)(ii). Notwithstanding the
foregoing, this Section 11(b) is not applicable in the event of the Executive’s termination for Cause.


 


(g)          Notwithstanding
the foregoing, if Executive is a “specified employee” (i.e., a “key employee” of a publicly traded company
within the meaning of Section 409A of the Code and the final regulations issued thereunder) and any payment under this Agreement
is triggered due to Executive’s Separation from Service (other than due to Disability or death), then solely to the extent
necessary to avoid penalties under Section 409A of the Code, no payment shall be made during the first six (6) months following
Executive’s Separation from Service. Rather, any payment which would otherwise be paid to Executive during such period shall
be accumulated and paid to Executive in a lump sum on the first day of the seventh month following such Separation from Service.
All subsequent payments shall be paid in the manner specified in this Agreement.


 


		12.	SEVERABILITY.



 


If, for any reason,
any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provision
of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the
full extent consistent with law continue in full force and effect.


 




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		13.	GOVERNING LAW.



 


This Agreement shall
be governed by the laws of State of New Mexico, but only to the extent not superseded by federal law.


 


		14.	ARBITRATION.



 


Any dispute or controversy
arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil
litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator mutually acceptable to the Bank
and Executive, sitting in a location selected by the Bank within fifty (50) miles from the main office of the Bank, in accordance
with the rules of the American Arbitration Association’s National Rules for the Resolution of Employment Disputes then in
effect. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.


 


		15.	PAYMENT OF LEGAL FEES.



 


To the extent that
such payment(s) may be made without triggering penalty under Code Section 409A, all reasonable legal fees paid or incurred by Executive
pursuant to any dispute relating to this Agreement shall be paid or reimbursed by the Bank, provided that the dispute is resolved
in Executive’s favor, and such reimbursement shall occur no later than sixty (60) days after the end of the year in which
the dispute is settled or resolved in Executive’s favor.


 


		16.	INDEMNIFICATION.



 


The Bank shall provide
Executive (including her heirs, executors and administrators) with coverage under a standard directors’ and officers’
liability insurance policy at its expense, and shall indemnify Executive (and her heirs, executors and administrators) for the
term of the Agreement and for a period of six (6) years thereafter to the fullest extent permitted under applicable law against
all expenses and liabilities reasonably incurred by her in connection with or arising out of any action, suit or proceeding in
which she may be involved by reason of her having been a director or officer of the Bank or the Company or any subsidiary or affiliate
of the Bank or the Company (whether or not she continues to be a director or officer at the time of incurring such expenses or
liabilities), such expenses and liabilities to include, but not be limited to, judgments, court costs and attorneys’ fees
and the cost of reasonable settlements (such settlements must be approved by the Board or the board of directors of the Company,
as appropriate); provided, however, neither the Bank nor Company shall be required to indemnify or reimburse Executive for legal
expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed
by Executive.


 


		17.	NOTICE.



 


For the purposes of
this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to
have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed
to the respective addresses set forth below:


 




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	To the Bank:	
        Bank 34.

        500 East 10th Street

        Alamogordo, New Mexico 88310

        Attn: Randal L. Rabon, Director 

         

	To Executive:	Most recent address on file with the Bank


 


[Signature Page Follows]


 




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IN WITNESS WHEREOF,
the parties have executed this Agreement as of the date first written above.


 


	 	BANK 34
	 	 
	 	By:	/s/ Randal L. Rabon
	 	Name:   Randal L. Rabon
	 	Title:     Board Chairman
	 	 
	 	EXECUTIVE
	 	 
	 	/s/ Jill Gutierrez
	 	Jill Gutierrez


 




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